Don't forget land transfer too. I just had this conversation with by brother-in-law yesterday. He lives in a 1300 sq. ft. 3 bedroom bungalow in Toronto. Has 3 kids so the house is small. If he sells, he will be out of pocket easily $50K on commission plus at least $20K on land transfer. If he spends $70k on his current home to update the layout or even $100k to add some livable space, he still way ahead not selling.

This same logic applies to a flip.

As I have said before, dump your money into a cottage. Goes up in value and his a whole lot of fun!

 

Yeah, I knew about land transfer tax, but was too lazy to figure out the rate.....

so subtract another $1.30 profit for land transfer tax. You make about $0.90 on your $20 investment on the year....

Cottage. devil's advocate...

Wife and I will have somewhere around 83% of a cottage through family inheritance on lake Muskoka.... We use the cottage alot... however....

Say $1.2 million cottage X 83% = $996,000 (funny number!)

invest that in a GIC or something dumb. at 3% = $30K interest
save the 0.6% property tax on 996,000 = $6K taxes saved...

That's $36K for some pretty nice vacations... (even if you spent half of that and reinvestted the other half).....
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As an aside, my family spent 38 nights at the cottage in 2018, including almost every weekend (and I stopped working Fridays last year ), that's getting pretty pricey for downtime.... $36K/ 38 nights if my inlaws didn't own the cottage.

AirBNB anyone?

 

We spend around 30 weekends per year plus 3 weeks vacation over the summer plus 4 - 5 days over Christmas. About 80 to 90 nights per year.

Our cottage is more about roots than anything else. I am on a 6 person cottage road. 1st property and last property are permanent residents for over 60 years. I adopted the last property owners as my mum and dad lol. They don't have kids. So, there is always a reason to go up. It is like going home. In fact, we say we have a house in Toronto but a home in the Kawartha's. Faster for me to get to a Canadian Tire at the cottage than in Toronto (Royal York and Bloor). Home Hardware, Tim Horton's, Grocery Store, Beer Store and Liquor store are less than 10 minutes away.

 

that's good use of it then... We typically open May long weekend, but don't go back up until After Schools out, Every summer weekend til labour day, and then not back until Thksgiving to close. 38 nights in that time frame is lots... I start wishing for more downtime at home.

Both our parents have cottages on Lake Muskoka about 12 mins apart by boat.

 

agree real estate is a tough one when you look at the real costs involved with trading and holding it.